U.S. equity market volatility is hovering around its lowest level since August 2015 and is well below its long-term average. This unusual calm follows declining market concerns about sliding oil prices, and the health of China’s economy and European banks. We do not expect this to last, and see a return to the higher-volatility regime that was the norm prior to QE.

The firm views Gold as a effective hedge if volatility spikes due to rising U.S. inflation fears. They also like TIPS and similar instruments. Foreign-currency exposure can act as a diversifier as well.